Table of Contents
Ultra Short Term Bond Funds
Ultra short term funds, earlier referred as Liquid Plus Funds, are funds that invest in debt instruments having residual maturities of more than 91 days and typically less than 1 year(in some cases they may go upto 1.5 years). Ultra Short Term Funds are short term investments that are highly suitable for investors who are willing to marginally increase the risk of investment to earn good returns. Essentially, Ultra short Funds invest in money market securities and other debt instruments of short maturities, however, the average portfolio maturity of these funds is generally little higher than that of Liquid Funds.
Also known as Cash or Treasury Management Funds, Ultra Short Term Funds generally offer good returns that other types of Debt fund (like Liquid Mutual Funds).
Ultra Short Term Bond Funds Features
Fund Type
Ultra-Short Term Funds are open-ended and the maturity period of funds varies from fund to fund. The maturity is very short(usually a couple of months) but longer than that of liquid funds. The investors can easily buy and sell the units of these funds as per the NAV (Net Asset Value) of the redemption day.
NAV of Ultra Short Term Funds
For Ultra Short Term Funds, the purchase happens on a (T+0) basis. This means that the NAV is fixed on the same day as the funds reach the AMC. For e.g. for an investor purchasing the fund within the cut-off time on a Tuesday (and funds being realised), the NAV date applicable would be Tuesday itself.
Exit Load of Ultra Short Term Bond Funds
Some Ultra Short Term Funds may have exit loads on exits made within very short periods of time (ranging from 7 days to 1 month). The period till which exit load applies may vary with funds. However, some ultra short terms funds do not have any exit loads also.
Returns of Ultra Short Term Funds
The returns may be paid to the investors in the form of Dividends (in the case of Dividend Funds) or in terms of appreciation of the fund NAV (in the case of Growth funds).
Redemption Ultra Short Term Funds
In the case of redemption, the process is the same for both liquid funds and Ultra Short Term Funds. For all redemption requests received by the AMC within the cut-off time (3 PM), the proceeds are paid to the customer the next day i.e. on a (T+1) basis. Albeit, if the request gets registered after 3 PM, the investors shall receive the redemption amount day after.
Minimum Amount of Investment
The minimum of Investing in Ultra Short Term Funds is INR 5,000 to 10,000 (on the retail plans).
Talk to our investment specialist
Investment Avenues of Ultra Short Mutual Funds
Ultra Short Term Funds are fixed income investments that invest in money market instruments like Treasury Bills but these may be 91-Day, 182-Day or 360-Day Treasury Bills. They can also invest in CDs and CPs having residual maturities longer than 91 days. Moreover, it is sometimes understood that there is no credit risk in such portfolios. However, this is not the case. Any short term investment like Ultra Short Funds can give a negative return as well if there is a default. But, most companies delay payments on longer-dated Bonds before they start defaulting on short term debt (since this would lead a freeze in short term credit). Also, the investors need to carefully look at the portfolio in these funds to assess the quality of instruments and be ready to take that risk.
Why Invest in Best Ultra Short Term Funds?
Typically, the yield on a debt instrument is higher for instruments with longer maturities. Think of it as a way to reward the extra risk that investors take to be invested in the instruments for a longer period of time. In finance, this is called the liquidity premium Theory. Thus, securities in Ultra Short Mutual Funds usually earn a higher yield as compared to Liquid funds (albeit at a relatively higher risk). As a result, Ultra Short Term Funds may give marginally better returns than Liquid funds over comparable periods of time. So, make a sensible short-term investment in Mutual Funds by investing in Best Ultra Short term Mutual Funds to earn good returns with less volatility.
Taxation of Ultra Short Term Funds
In the below table, the returns of Ultra Short Bond Funds received in the form of a dividend are tax-free in the hands of investors.
However, a Dividend Distribution Tax (DDT) is deducted at the source by fund houses, which is 25% in case of Debt Funds like Ultra Short Term Funds.
| Liquid Funds | Liquid Funds | Ultra Short Funds | Ultra Short Funds | |
|---|---|---|---|---|
| Class of Investors | Individuals/HUF | Corporate | Individuals/HUF | Corporate |
| Dividend Distribution Tax | 27.038% | 32.445% | 13. 519% | 32.445% |
| Short Term Capital Gains | As per income tax Slab Rates | As per Income Tax Slab Rates | As per Income Tax Slab Rates | As per Income Tax Slab Rates |
(Please note, investors are advised to consult their Tax consultant before taking any decisions)
Best Performing Ultra Short Debt Funds to Invest FY 20 - 21
Below is the list of top funds have net assets over 100 Crore and managing assets for atleast 3 years.
Fund NAV Net Assets (Cr) 1 MO (%) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) IDBI Ultra Short Term Fund Growth ₹2,100.86
↑ 1.61 ₹114 0.8 1.3 2.5 10.7 6.4 6.7 Aditya Birla Sun Life Savings Fund Growth ₹409.051
↑ 0.18 ₹12,268 1.2 3 4.2 8.3 7.9 8.2 ICICI Prudential Ultra Short Term Fund Growth ₹20.8273
↑ 0.02 ₹5,426 1.2 2.3 3.6 7.9 7.6 8.2 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 10 Jul 20
The objective of the Scheme will be to provide investors with regular income for their investment by investing in debt and money market instruments with relatively lower interest rate risk, such that the Macaulay duration of the portfolio is maintained between 3 months to 6 months. However, there can be no assurance that the investment objective of the Scheme will be realized. IDBI Ultra Short Term Fund is a Debt - Ultrashort Bond fund was launched on 3 Sep 10. It is a fund with Moderately Low risk and has given a Below is the key information for IDBI Ultra Short Term Fund Returns up to 1 year are on The primary objective of the schemes is to generate regular income through investments in debt and money market instruments. Income maybe generated through the receipt of coupon payments or the purchase and sale of securities in the underlying portfolio. The schemes will under normal market conditions, invest its net assets in fixed income securities, money market instruments, cash and cash equivalents. Aditya Birla Sun Life Savings Fund is a Debt - Ultrashort Bond fund was launched on 16 Apr 03. It is a fund with Moderately Low risk and has given a Below is the key information for Aditya Birla Sun Life Savings Fund Returns up to 1 year are on (Erstwhile ICICI Prudential Regular Income Fund) The fund’s objective is to generate regular income through investments primarily in debt and money market instruments. As a secondary objective, the Scheme also seeks to generate long term capital appreciation from the portion of equity investments under the Scheme. ICICI Prudential Ultra Short Term Fund is a Debt - Ultrashort Bond fund was launched on 3 May 11. It is a fund with Moderate risk and has given a Below is the key information for ICICI Prudential Ultra Short Term Fund Returns up to 1 year are on 1. IDBI Ultra Short Term Fund
CAGR/Annualized return of 7.8% since its launch. Ranked 78 in Ultrashort Bond category. Return for 2019 was 6.9% , 2018 was 6.9% and 2017 was 5.8% . IDBI Ultra Short Term Fund
Growth Launch Date 3 Sep 10 NAV (10 Jul 20) ₹2,100.86 ↑ 1.61 (0.08 %) Net Assets (Cr) ₹114 on 30 Apr 20 Category Debt - Ultrashort Bond AMC IDBI Asset Management Limited Rating ☆ Risk Moderately Low Expense Ratio 0.89 Sharpe Ratio 0.43 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 0% Effective Maturity Modified Duration Growth of 10,000 investment over the years.
Date Value 30 Jun 15 ₹10,000 30 Jun 16 ₹10,770 30 Jun 17 ₹11,505 30 Jun 18 ₹12,202 30 Jun 19 ₹12,502 30 Jun 20 ₹13,847 Returns for IDBI Ultra Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 10 Jul 20 Duration Returns 1 Month 0.8% 3 Month 1.3% 6 Month 2.5% 1 Year 10.7% 3 Year 6.4% 5 Year 6.7% 10 Year 15 Year Since launch 7.8% Historical performance (Yearly) on absolute basis
Year Returns 2019 6.9% 2018 6.9% 2017 5.8% 2016 7.9% 2015 7.8% 2014 8.7% 2013 9.2% 2012 9.7% 2011 9.3% 2010 Fund Manager information for IDBI Ultra Short Term Fund
Name Since Tenure Bhupesh Kalyani 1 Feb 17 3.41 Yr. Data below for IDBI Ultra Short Term Fund as on 30 Apr 20
Asset Allocation
Asset Class Value Cash 65.54% Debt 34.46% Debt Sector Allocation
Sector Value Cash Equivalent 65.54% Corporate 20.53% Government 13.94% Credit Quality
Rating Value A 25.04% AA 36.88% AAA 38.08% Top Securities Holdings / Portfolio
Name Holding Value Quantity Treps
CBLO/Reverse Repo | -43% ₹51 Cr 5,077,853 Punjab National Bank
Debentures | -14% ₹16 Cr 1,700,000 Bandhan Bank Limited
Certificate of Deposit | -13% ₹15 Cr 1,500,000 Vedanta Limited
Debentures | -9% ₹10 Cr 1,050,000 Tata Power Company Limited
Commercial Paper | -8% ₹10 Cr 1,000,000 J.K.Cement Limited
Debentures | -6% ₹8 Cr 2,500,000 Axis Bank Limited
Debentures | -3% ₹4 Cr 370,000 J.K.Cement Limited
Debentures | -2% ₹3 Cr 900,000 Net Receivable / Payable
Net Current Assets | -1% ₹1 Cr 2. Aditya Birla Sun Life Savings Fund
CAGR/Annualized return of 7.8% since its launch. Ranked 6 in Ultrashort Bond category. Return for 2019 was 8.5% , 2018 was 7.6% and 2017 was 7.2% . Aditya Birla Sun Life Savings Fund
Growth Launch Date 16 Apr 03 NAV (10 Jul 20) ₹409.051 ↑ 0.18 (0.04 %) Net Assets (Cr) ₹12,268 on 30 Apr 20 Category Debt - Ultrashort Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.35 Sharpe Ratio 7.52 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 0% Effective Maturity Modified Duration Growth of 10,000 investment over the years.
Date Value 30 Jun 15 ₹10,000 30 Jun 16 ₹10,891 30 Jun 17 ₹11,820 30 Jun 18 ₹12,608 30 Jun 19 ₹13,686 30 Jun 20 ₹14,820 Returns for Aditya Birla Sun Life Savings Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 10 Jul 20 Duration Returns 1 Month 1.2% 3 Month 3% 6 Month 4.2% 1 Year 8.3% 3 Year 7.9% 5 Year 8.2% 10 Year 15 Year Since launch 7.8% Historical performance (Yearly) on absolute basis
Year Returns 2019 8.5% 2018 7.6% 2017 7.2% 2016 9.2% 2015 8.9% 2014 9.7% 2013 9.5% 2012 9.7% 2011 9.2% 2010 5.8% Fund Manager information for Aditya Birla Sun Life Savings Fund
Name Since Tenure Sunaina Cunha 11 Oct 14 5.73 Yr. Kaustubh Gupta 15 Jul 11 8.97 Yr. Data below for Aditya Birla Sun Life Savings Fund as on 30 Apr 20
Asset Allocation
Asset Class Value Cash 27.35% Debt 72.65% Debt Sector Allocation
Sector Value Corporate 66.41% Government 21.41% Cash Equivalent 11.35% Securitized 0.83% Credit Quality
Rating Value AA 11.39% AAA 88.61% Top Securities Holdings / Portfolio
Name Holding Value Quantity Clearing Corporation Of India Limited
CBLO | -6% ₹827 Cr Reliance Industries Limited
Debentures | -6% ₹744 Cr 7,400
↑ 1,000 POWER FINANCE CORPORATION LIMITED
Debentures | -5% ₹607 Cr 6,000
↑ 1,550 Housing Development Finance Corporation Limited
Commercial Paper | -3% ₹398 Cr 8,262
↑ 2,262 Shriram Transport Finance Company Limited
Debentures | -3% ₹364 Cr 3,750
↑ 250 IndusInd Bank Limited
Certificate of Deposit | -3% ₹332 Cr 35,000 Rec Limited
Debentures | -3% ₹327 Cr 3,250 NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
Debentures | -2% ₹318 Cr 3,150
↑ 2,000 Rural Electrification Corporation Limited
Debentures | -2% ₹290 Cr 2,900
↓ -2,600 Housing Development Finance Corporation Limited
Debentures | -2% ₹273 Cr 2,675
↑ 1,675 3. ICICI Prudential Ultra Short Term Fund
CAGR/Annualized return of 8.3% since its launch. Ranked 27 in Ultrashort Bond category. Return for 2019 was 8.4% , 2018 was 7.5% and 2017 was 6.9% . ICICI Prudential Ultra Short Term Fund
Growth Launch Date 3 May 11 NAV (10 Jul 20) ₹20.8273 ↑ 0.02 (0.08 %) Net Assets (Cr) ₹5,426 on 30 Apr 20 Category Debt - Ultrashort Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆ Risk Moderate Expense Ratio 1.09 Sharpe Ratio 5.75 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load 0-1 Months (0.5%),1 Months and above(NIL) Yield to Maturity 0% Effective Maturity Modified Duration Growth of 10,000 investment over the years.
Date Value 30 Jun 15 ₹10,000 30 Jun 16 ₹10,917 30 Jun 17 ₹11,907 30 Jun 18 ₹12,677 30 Jun 19 ₹13,723 30 Jun 20 ₹14,803 Returns for ICICI Prudential Ultra Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 10 Jul 20 Duration Returns 1 Month 1.2% 3 Month 2.3% 6 Month 3.6% 1 Year 7.9% 3 Year 7.6% 5 Year 8.2% 10 Year 15 Year Since launch 8.3% Historical performance (Yearly) on absolute basis
Year Returns 2019 8.4% 2018 7.5% 2017 6.9% 2016 9.8% 2015 9.1% 2014 14.8% 2013 3.1% 2012 9.4% 2011 2010 Fund Manager information for ICICI Prudential Ultra Short Term Fund
Name Since Tenure Manish Banthia 15 Nov 16 3.63 Yr. Ritesh Lunawat 15 Jun 17 3.05 Yr. Data below for ICICI Prudential Ultra Short Term Fund as on 30 Apr 20
Asset Allocation
Asset Class Value Cash 37.14% Debt 62.86% Debt Sector Allocation
Sector Value Corporate 76.11% Cash Equivalent 16.64% Government 6.11% Securitized 1.14% Credit Quality
Rating Value A 5.42% AA 47.53% AAA 47.05% Top Securities Holdings / Portfolio
Name Holding Value Quantity Treps
CBLO/Reverse Repo | -5% ₹237 Cr MANAPPURAM FINANCE LIMITED
Debentures | -4% ₹201 Cr 2,000 JSW Energy Limited
Debentures | -4% ₹201 Cr 2,000 Syndicate Bank
Certificate of Deposit | -4% ₹200 Cr 20,000
↑ 20,000 Rural Electrification Corporation Limited
Debentures | -3% ₹177 Cr 1,750
↑ 1,500 Tata Value Homes Limited
Debentures | -3% ₹151 Cr 1,500 Aspire Home Finance Corporation Limited
Debentures | -3% ₹150 Cr 1,500 84 DTB 20082020
Sovereign Bonds | -3% ₹149 Cr 15,000,000
↑ 15,000,000 AU Small Finance Bank Limited
Certificate of Deposit | -3% ₹146 Cr 15,000 NIRCHEM Cement Limited
Debentures | -3% ₹132 Cr 1,310
invest smart, Invest Better!
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
AMFI Registration No. 112358 | CIN: U74999MH2016PTC282153
Shepard Technologies Pvt. Ltd. (with ARN code 112358) makes no warranties or representations, express or implied, on products offered through the platform. It accepts no liability for any damages or losses, however caused, in connection with the use of, or on the reliance of its product or related services. Terms and conditions of the website are applicable.
©2020 Shepard Technologies Private Limited. All Rights Reserved